Many people blame liquidation on luck, saying that the market is too tricky and the spikes are too harsh.
But to say something unpleasant, the vast majority of liquidations are not due to bad luck, but rather a failure to manage positions.
I've seen too many contract traders operate with the same routine:
They hurry to exit when there’s a slight increase, and as a result, the market soars afterward.
When the market drops, they desperately try to average down, and end up getting liquidated by a sudden spike.
They actually had the right direction, but were washed out by a few small pullbacks.
This kind of trading method, to put it bluntly, lacks rhythm.
Those who truly know what they’re doing actually think in the opposite way.
Instead of starting with a heavy bet, they first clarify three things:
Protect the principal
$STG .
Wait for the right position to add to the position.
Only use profits to roll.
Many people add positions in the wrong places, so they end up losing more.
What actually works well is the inverted pyramid method of rolling positions.
What does that mean?
First, use a small position to test the market. $SIREN .
Once the signal is confirmed, use the profits earned to gradually roll up.
Let’s illustrate a simple idea:
Assuming the account has 10,000 USDT.
In the first step, only a small portion of funds is used to test the trades, for example, 500 USDT, with a strict stop-loss.
If the market doesn’t give a signal, don’t act.
It’s better to miss out than to enter recklessly.
If the direction is correct, after floating profits arise, then take part of the profits for the first position addition.
If the market continues to move and key levels are broken, use the remaining profits to continue rolling.
Note an important point: throughout the process, the principal remains largely untouched.
When the market truly establishes a strong trend, and the floating profits even exceed the principal, it’s time to start protecting profits.
For example, hedge part of the position or take profits in batches.
If the market continues to accelerate, then go for the final segment.
This is one point that many people do not understand: experts do not make money by going all in but by continuously using profits to expand their advantage.
So the issue of liquidation is essentially not a market problem.
It’s that many people from the very beginning treat trading as gambling.
The market is indeed very cruel, but it is actually very fair.
Those who have rules make money gradually.
Those without rules get eliminated gradually.
If you are still relying on feelings to place orders, you will eventually be educated by the market
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